Arjun @ Kuttan v. C.E. Varghese and others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT** ## **THE HONOURABLE MR. JUSTICE A.HARIPRASAD** ## **FRIDAY ,THE 07TH DAY OF SEPTEMBER 2018 / 16TH BHADRA, 1940** ## **FAO (RO).No. 51 of 2017** **AGAINST THE DECREE AND JUDGMENT DATED 18-01-2017 IN AS 101/2011 of DISTRICT COURT, ALAPPUZHA.** **AGAINST THE DECREE AND JUDGMENT DATED 23-07-2011 IN OS 32/2008 of SUB COURT, CHERTHALA.** ## **APPELLANT/1ST RESPONDENT/PLAINTIFF :** **ARJUN @ KUTTAN, S/O. PARAMESWARAN ALIAS PARAMAN, AGED 59 YEARS, RESIDING AT ALUNKAL VEETTIL, KADAKKARAPPALLY MURI, KADAKKARAPPALLY VILLAGE.** **BY ADVS.MS.C.G. BINDU & MS.C.G.AJITHA.** ## **RESPONDENTS/APPELLANT & RESPONDENTS 2 & 3:** - **1 C.E. VARGHESE, AGED 42 YEARS, S/O. ESSUKUTTY, RESIDING AT CHULLICKAL UZHUVA MURI, KADAKKARAPPALLY VILLAGE - 688 529.** - **2 OMANA, W/O. BABU, RESIDING AT THAKIDIVELY, MANNANCHERRY PANCHAYATH, WARD NO.22, KALAVOOR P.O, FROM KANDOMKALY PARAMBIL, KADAKKARAPPALLY MURI, KADAKKARAPPALLY VILLAGE - 688 529.** - **3 BABU, S/O. RAJAN, RESIDING AT THAKIDIVELY, MANNANCHERRY PANCHAYATH, WARD NO.22, KALAVOOR P.O, FROM KANDOMKALY PARAMBIL,KADAKKARAPPALLY MURI, KADAKKARAPPALLY VILLAGE - 688 529.** - **4 THANKY SERVICE CO-OPERATIVE BANK LTD NO. 1003 IN KADAKKARAPPALLY VILLAGE REPRESENTED BY ITS SECRETARY- 688 529.** **BY ADVS.** - **R1 BY SRI. NAVOD PRASANNAN PATTALI. R4 BY SRI.V.G.ARUN & SRI. T.R. HARIKUMAR.** **THIS FIRST APPEAL FROM ORDER - REMAND ORDER HAVING BEEN FINALLY HEARD ON 07.09.2018, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** F.A.O (R.O) No.51 of 2017 2 ## A.HARIPRASAD, J. -------------------------------------- ## F.A.O (R.O) No.51 of 2017 -------------------------------------- Dated this the 07th day of September, 2018 ## J U D G M E N T Heard the learned counsel for the appellant and first respondent. Learned Standing counsel for the fourth respondent is also heard. 2. This appeal is against the judgment and decree passed by the District Judge, Alappuzha in A.S No.101 of 2011. That appeal arose out of the judgment and decree in O.S No.32 of 2008 before the Court of Subordinate Judge, Cherthala. The present appellant is the plaintiff in that suit. First respondent is not a party to the suit. He preferred an appeal against the decree in the suit granting specific performance of Ext.A1 agreement executed by defendants 1 and 2. According to the first respondent, he is aggrieved by the decree because during pendancy of the suit, the property was assigned to him by defendants 1 and 2 and he claims to be a bona fide purchaser for value without notice of the contract. However, this proposition is F.A.O (R.O) No.51 of 2017 3 strongly disputed by the appellant. 3. Short facts, are as follows : Plaint schedule property item No.1 belonged to the first defendant. Item No.2 and a residential house belonged to the second defendant. They agreed to sell the properties to the appellant as per Ext.A1 agreement. The date of agreement is 23-07-2007. Time fixed for performance of the contract was six months. Appellant contended that he was always ready and willing to perform his part of the contract. Defendants 1 and 2 availed a loan from the third defendant bank (4 th respondent herein). Since the liability was not discharged, the third defendant was also impleaded in the suit. Believing the words of defendants 1 and 2, the appellant prepared a sale deed in favour of his wife's sister's daughter. But the defendants did not execute the document as agreed. Therefore, the suit was filed for the relief of specific performance of Ext.A1 contract. 4. Defendants 1 and 2 opposed the suit disputing their liability. According to them, the plaintiff is not entitled to enforce Ext.A1. It is also contended by them F.A.O (R.O) No.51 of 2017 4 that the plaint schedule property had already been sold to the first respondent on 13-03-2008. 5. Third defendant bank filed a written statement supporting the contentions of other defendants. 6. The court below, after taking evidence, decreed the suit. It is pertinent to note that the first respondent was not brought as a party to the proceedings before the trial court. 7. It is seen from the judgment passed by the court below that defendants 1 and 2 did not contest the suit. 8. Feeling aggrieved by the judgment and decree, the third defendant, who purchased the property from defendants 1 and 2, filed the appeal. After consideration, the lower appellate court remanded the case to the trial court with certain directions. 9. Certain relevant facts will have to be noticed here. As mentioned above, the contract between the plaintiff and defendants 1 and 2 was on 23-07-2007. On F.A.O (R.O) No.51 of 2017 5 03-01-2008, the defendants filed a caveat before the trial court anticipating a litigation. The suit was filed on 02-02-2008. Subsequent to the suit, on 13-03-2008, the defendants 1 and 2 sold the property to the first respondent. Along with the suit, two applications were filed by the plaintiff seeking temporary injunction against alienation and attachment of property. In those matters, defendants 1 and 2 entered appearance and undertook before the court below that they would not alienate the property or create any encumbrance on it. In violation of the undertaking given to the court, they alienated the property to the first respondent. It is a serious grievance raised by the appellant. 10. Learned counsel for the appellant contended that on four counts the order of remanded is unsustainable. Firstly, the appeal was instituted without obtaining a leave of the court. Regarding this submission, the learned counsel for the first respondent contended that from the judgment of the court below, it will be clear that the court presumed a grant of leave since the appeal was admitted to file in the year 2011 and it was only disposed only on 18-01-2017. Relying on the F.A.O (R.O) No.51 of 2017 6 provisions in Sections 96 and 146 of the C.P.C and also on Order 20 Rule 6 and Order 22 Rule 10 of the C.P.C, learned counsel for the appellant contended that without obtaining a leave from the court, a third party could not have filed an appeal. It is not specifically mentioned in the lower appellate court's judgment that an application had been filed for obtaining leave at the time of filing the appeal. Reliance is placed by the learned counsel for the appellant on a decision rendered by a Single Judge of this Court in Ramachandran Potti v. Thankam (2004(3) K.L.T 183) , wherein precedents on the point had been referred to. In the above decision, the well settled principle has been restated that if a person who is not a party to the decree or order wants to challenge the decree or order, he can maintain an appeal with the leave of the appellate court and if he is able to prima facie show that he is either bound by the order or is aggrieved by it or is prejudicially affected by it, the appellate court shall grant leave sought for. This principle is indubitable. The only complaint is that no mention has been made by the lower appellate judge that a particular interlocutory application has been filed for grant of leave. It is clear from F.A.O (R.O) No.51 of 2017 7 the impugned judgment that the court below has examined that contention raised by the plaintiff before the lower appellate court and found that there was ample reason for presuming the leave. 11. This question is to be considered in the light of the principles of law stated in Thomas Press (India) Limited v. Nanak Builders and Investors Private Limited and Others ((2013) 5 S.C.C 397). That decision was relied on by the court below. Of course, the learned counsel for the appellant has raised serious objection against relying on the principles in that decision to a case having different set of facts. Two judge bench of the Supreme Court, after considering the various aspects, found that the appellant before the Supreme Court was not a bona fide purchaser and is, therefore not protected against specific performance of the contract between the plaintiffs and the defendant (owners) in the suit. It also found that the transfer in favour of the appellant pendente lite is effective in transferring title to the appellant, but such title shall remain subservient to the rights of the plaintiff in the suit and subject to any direction which the court may eventually pass therein. F.A.O (R.O) No.51 of 2017 8 Further finding is that since the appellant before the Supreme court has purchased the entire estate that formed the subject matter of the suit, the appellant was entitled to be added as a party-defendant to the suit. The appellant could raise and pursue only such defences as were available and taken by the original defendants and none other. 12. In this case also, it is an admitted fact that pending litigation, the defendants 1 and 2 assigned their rights over the disputed property in favour of the first defendant. If the decree passed by the trial court is enforced against defendants 1 and 2, practically no title will be derived by the plaintiff since respondent 1 and 2 had divested their title in the property in favour of the first respondent. Viewing from this angle also, presence of first respondent in the party array is essential for claiming an effective decree by the plaintiff in a suit for specific performance. 13. As pointed out by the learned counsel for the appellant the finding entered by the lower appellate court that the appellant is a bona fide purchaser for value cannot be sustained for the reason that it can be found only after taking F.A.O (R.O) No.51 of 2017 9 evidence. Any finding entered in that manner in a remand order will certainly cause prejudice to the plaintiff since the trial court will be carried away by such findings. Appellant has a case that the first respondent is not a bona fide purchaser for value for too many reasons. Firstly, it is contended by the learned counsel that the first respondent had preferred O.S No.238 of 2011 before the Sub Court, Cherthala, claiming damages from defendants 1 and 2 and obtained a decree against the defendants therein. According to the learned counsel for the appellant, if the amount involved in the decree is realized, virtually the appellant will receive back the consideration paid by him for the property. However, that is a question to be decided in an appropriate proceedings between appropriate parties. Findings by the lower appellate court that the first respondent is a bona fide purchaser cannot be justified in the absence of any reliable material placed before it. 14. Another contention raised by the learned counsel for the appellant is that the benefit of Section 19(b) of the Specific Relief Act (in short 'the Act') claimed by the first respondent is not available to him for the reason that a transferee F.A.O (R.O) No.51 of 2017 10 pendente lite cannot claim any benefit of the above provision. To buttress this point, a decision rendered by a Single judge of this Court in Padmaja v. Sajeev (2006 (1) K.L.T 265) is relied on. The relevant paragraph reads thus : " 27. The right of a transferee pendente lite is subservient to the decree and he is bound by the decree passed in the suit against his transferor. The decree can be enforced even against the transferee without notice. The benefit that could be claimed by a subsequent transferee under S.19(b) of the Specific Relief Act would not be available to a transferee pendente lite. What is contemplated by S.19(b) is a transfer subsequent to the original contract and the transferee being a bona fide purchaser without notice of the original contract. S.19(b) does not apply in a case where a suit is filed before the transfer in favour of the subsequent transferee, in other words, the moment the suit is filed, the parties are governed by S.52 of the Transfer of Property Act and would not be governed by S.19(b) of the Specific Relief Act. S.52 of the Transfer of Property Act overrides S.19(b) of the Specific Relief Act. Both these provisions operate in different fields. F.A.O (R.O) No.51 of 2017 11 S.19(b) would have application to a transaction before suit while S.52 operates against a transfer subsequent to the institution of the suit. So long as the subsequent transferee does not claim under a transfer which came into existence before the institution of the suit, he cannot claim to be a transferee for value in good faith as provided in S.19(b) of the Specific Relief Act." 15. In the light of the above statement of law, the first respondent may not be able to claim any benefit of Section 19(b) of the Act. It is clear from a reading of Section 52 of the Transfer of Property Act that any transfer pendente lite even if it is a bona fide transfer may not save a party from the clutches of law. 16. Having regard to the submissions of the learned counsel on both sides and on perusal of the impugned judgment, I am of the view that the ultimate finding of the lower appellate court that presence of first respondent in the suit and a fresh trial to adjudicate his rights are essential for a proper and effective decision in this case cannot be faulted. The fact that a document has been created by defendants 1 and 2 pending the suit in favour of the first respondent cannot be F.A.O (R.O) No.51 of 2017 12 ignored. What is the effect of the document on the plaintiff's right is a matter to be decided in the trial. The observation by the lower appellate court that the first respondent is a bona fide purchaser is hereby vacated. The court below shall adjudicate that question too on the evidence available. Rest of the findings of the lower appellate court are confirmed. The appeal is found to be without any merit. The parties shall appear before the court below on 01-10-2018 and the court below shall allow the parties to raise pleadings and adduce evidence, if any, and take a final decision within a period of four months from the date of appearance. All pending interlocutory applications will stand closed. A. HARIPRASAD, JUDGE. amk